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Sep 20, 2016

S3 BLACKLIGHT: Alpha for Plug Power Shorts About to Take a Hit

Conviction to short Plug Power (PLUG US), the fuel cell and hydrogen renewable energy developer, continues to hold steady throughout September.  With stock borrow cost spiking to 75% fee today, short sellers have not covered their positions even as PLUG stock price rebounded 17% off the year to date low of $1.36 hit last week.

According to the S3 Velocity Indicator, a measure of the real-time relative change in shorting activity, the 7 day trend line is up 13% since the beginning of the month, suggesting short sellers continue to take advantage of any supply that becomes available to borrow.   The majority of the top 10 institutional holders who actively participate in lending programs have added to their longs as of 6/30, increasing the amount of total borrow liquidity to be sold short.   Current short interest is now estimated to be as high as $60 million, an exposure not seen since April.

With shares on loan compared to total lendable supply currently near 100% utilization, short sellers have yet to pull the “plug” on their bearish bets.  However, existing shorts should prepare for inevitable rate changes on their “power” play, cutting into alpha generation.     

For more information on the above analysis, please contact:
Matthew Unterman, Director, S3 Partners, LLC    

The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.

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